On appeal from the Superior Court of New Jersey, Law Division, Union County.
Dreier, Baime and Ashbey. The opinion of the court was delivered by Dreier, J.A.D.
[224 NJSuper Page 517] Plaintiffs Bluvias and Miller and defendants Butchko, Gervasi and Moran in these consolidated cases have appealed from judgments in favor of Winfield Mutual Housing Corporation determining that the individuals have violated their agreements with defendant and thus must forfeit their rights to perpetual occupancy of their dwellings in Winfield Park. For the sake of
convenience the residents will be referred to as plaintiffs and the Housing Corporation as defendant.
Winfield Park is a unique entity. It is a municipality duly incorporated as a township, but the entire area of the Township, with one minor exception, is owned by defendant, Winfield Mutual Housing Corporation. The sole exception is the street area which was ceded to the Township by the Corporation in order to obtain State road aid. The municipal building, school, shopping area and all of the dwelling units in the Municipality are owned by the Corporation.*fn1
During the Second World War defendant leased the housing project from the federal government, the lease containing a favorable option to purchase. In late 1950 the Corporation exercised the option, and the entire project was sold to the Corporation for $1,358,567.21, secured by a mortgage on the project. The mortgage instrument imposed rigorous conditions upon membership in the Corporation and the terms of occupancy. Insofar as the terms are pertinent to this case, the mortgage required that the members of the Corporation execute mutual ownership contracts as evidence of their rights to "perpetual use in a dwelling unit" in the project and imposed restrictions on becoming a "member" of the Corporation. Consequently both the by-laws of the Corporation and the mutual ownership contract provide that a signatory member must occupy the dwelling unit. The member cannot sublease his
units except with the Corporation's express permission, and if a member surrenders his certificate and ceases to occupy the dwelling unit, the Corporation has the right of first refusal to purchase the unit for a set amount, currently $2,500. This is the approximate price that past and current members have paid for their units. In addition, members are assessed monthly maintenance charges at an extremely low rate, currently under $250.
The principal disputed restriction involves the Corporation's method of selecting new members. The restrictions are applied when a unit becomes vacant. It is theoretically possible that the Corporation would not exercise its right of first refusal to repurchase the unit for $2,500. Given the cost of alternative housing, however, it is highly unlikely that the Corporation would forego this valuable right. The Corporation therefore historically is the sole transferee of any unit, and it reassigns the unit according to a specific priority list, to wit:
1. Current members displaced by fire;
2. Current members who vacate to serve in the armed forces;
3. Current members who wish to transfer to a different unit;
4. Sons and daughters of current members who have served in the armed forces;
5. Sons and daughters of ...